This bar chart is wild. For the past year, inventory in Washington DC has been climbing, nearing 6 months of supply in May 🚀.
The 5 year average for DC real estate supply is 3.4 months.
This 10 year chart is even more dramatic:
This data would seem to point to a pretty strong buyers' market. So while the number of days from listing to contract has steadily risen this spring, why have DC home prices also gone up? 📈
It doesn't seem to make sense.... until you look at the rest of the data and do some simple math.
Yes, stubbornly high mortgage rates are preventing potential buyers in many price points from entering the market, but some homes are consistently selling. 💵 Who's purchasing them? Luxury buyers. And nearly half of May sales were all cash.
The greatest number of DC homes sold last month were in the $1M to $2,499,999 range. That price point also had the largest share of Active listings on MLS. In lower price points, activity was slow by comparison:
- $200K to $299,999: 42 sales across all home types
- $300K to $399,999: 57 sales (all home types)
- $400K to $499,999: 61 sales (all home types)
- $500K to $599,999: 55 sales (all home types)
- $600K to $799,999: 85 sales (all home types)
- $800K to $999,999: 61 sales (all home types)
- $1M to $2,499,999: 159 sales (all home types)
- $2.5M to $4,999,999: 22 sales (all home types)
- $5,000,000+: 5 sales (all home types)
It's not how much inventory there is that matters to buyers and sellers, it's the type of inventory... and where it's located.
Individual home buyers searching a property supply of almost 6 months, consider:
- That half of those listings are likely priced outside of their budgets—too low, too high—and have attributes that don’t meet their particular needs;
- About 30% of gross inventory is made up of home types and price points that aren’t selling well due to lending requirements, mortgage interest rates, association fees, or property condition;
- Up to 70% of the remaining inventory isn't in the buyer's desired locations.
What's left when you eliminate all that inventory? A tiny slice worth pursuing. And in that segment, scarcity and competition will push prices up, even as report after report says Washington DC home prices are softening due to increasing supply.
The fact is that gross inventory volume data as a standalone metric is not especially useful to most home buyers and sellers. What it does is skew perception of DC's real estate market conditions and set unrealistic expectations amongst home buyers and sellers.
A better way of viewing the market is on a case-by-case basis, using a combination of metrics specific to the individual's price point, desired home type and location. And--of course--to seek the advice of a qualified expert who knows the market. 👍
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